Manufacturing & The Economy

For the second consecutive month, small-business owner confidence edged up, according to NFIB’s Index of Small Business Optimism, which increased by 2.3 points to a final reading of 94.4 in May. While May’s reading is the second highest since the recession started December 2007, the Index does not signal strong economic growth for the sector. Eight of 10 Index components gained momentum, showing some moderation in pessimism about the economy and future sales, but planned job creation fell 1 point and reported job creation stalled after five months of gains. Small Business Optimism

The small business half of GDP is not generating growth beyond population gains. More businesses are being formed than lost, but too many existing firms have not yet started to replace the workers shed during the recession. The Optimism Index is at its May 2012 level, which is identical to the November 2007 level. Since then, the Index has been higher in only three months, each time by less than 2 points.